No Mention of Skill Games in Pennsylvania’s Approved 2026-27 Budget

For the fifth consecutive year, Pennsylvania has delayed approving its state budget. The lawmakers eventually agreed upon a spending plan totaling $50.8 billion. However, one topic remains unresolved and largely ignored: the regulation of skill games.

Governor Signs Off Without Addressing Skill Games

Governor Josh Shapiro signed the 2026-27 budget earlier this month. Despite months of heated discussions and mounting pressure from the skill games industry, no provisions were included in the budget to regulate or tax these games.

A recent decision by the Pennsylvania Supreme Court declared skill games illegal under current state law. Lawmakers were given a 120-day deadline to develop a proper legal framework. This deadline is set to expire on October 13. If no action is taken, venues currently hosting skill games could face law enforcement raids and potential seizure of the machines.

The affected locations could range from bars and restaurants to gas stations, convenience stores, and other local businesses.

The Ongoing Debate Over Taxation and Regulation

Skill games, which visually and functionally resemble slot machines but require some player interaction, have gained popularity across Pennsylvania over the last ten years.

Supporters argue these games provide vital revenue for small businesses and community organizations. Opponents contend they closely mimic casino gambling but lack proper taxation and oversight.

In February, Governor Shapiro proposed a 52% tax rate on skill games, predicting this could generate approximately $8 billion in revenue over the next five years. Nonetheless, disagreements remain over how the industry should be regulated.

Various lawmakers have proposed differing tax rates: Senator Gene Yaw supports a 16% tax, Senator Chris Gebhard suggests 35%, while Representative Kerry Benninghoff’s bill calls for no additional taxes. Representative Danilo Burgos has recommended monthly fees and statewide limits on the number of machines.

The casino industry in Pennsylvania advocates for taxing skill games at the same 54% rate that applies to retail slot machines.

The ongoing uncertainty affects thousands of small businesses. Many bars, clubs, and convenience stores depend on the supplemental income provided by skill games. Meanwhile, manufacturers such as Pace-O-Matic continue lobbying for a lower tax structure. In June, Pace-O-Matic emphasized their commitment to supporting legislation that helps small businesses and clubs maintain their supplemental revenue from skill games.